The business side of running a cupcake bakery

Farnoosh Torabi at Mainstreet just wrote an article about the business side of opening a bakery, quoting me and mentioning/talking to many bakeries, including Sprinkles Cupcakes, Crumbs Bakeshop, Main Street Cupcakes, Baked by Melissa, Manille Bakery, Cupcakes Nouveau, and Sweet Revenge.

I thought one of the most illuminating parts of the piece was the cost breakdown for a new bakery, using Provo's The Sweet Tooth Fairy as an example:

Here’s a rundown of the cupcake shop’s start-up costs and monthly expenses:

The Small Business:
The Sweet Tooth Fairy Bake Shop
1227 S. University Ave.
Provo, Utah
Est. Jan. 31, 2009

The Start-Up Costs:
Security deposit = $3,600
Construction = $25,000
Start-up inventory =$5,000
Oven = $8,000
Pots, pans, tables and racks = $8,000
Permits = $1,000
Total start-up costs = $50,600

The Monthly Expenses:
Staffing = $3,500
Rent and utilities = $3,000
Inventory = $1,500
Insurance = $100
Rough monthly expenses = $8,100

Number of $2.25 cupcakes she must sell a day to break even: 120


michelle said…
WOW! 120 cupcakes a day sure does sound like a lot. I always thought a cupcake bakery would be so fun. Considering I am not a very good baker, I think the thought of decorating a cupcake bakery is more what I think of :)
Simply Me said…
thank you so much for putting that up there.. my friend is a great baker and I know her dream is to open a bakery one day. Good insight.

Unknown said…
Hhm.. A little disheartening I must say. Still. No one can stop me! ;)
The Keala's said…
I live very close to this amazing little sweet shop, and am so impressed with what Megan has done plus the fantastic selection of goodies she offers! And in Utah we are very limited on stores like this! I wish her all the best, and I'm gonna go buy a cupcake or three :)
This is a really great article... I'm looking to start an online cupcake business to launch in 2010 when my husband deploys again. Do you have any suggestions for graphic designers and online marketers like the article suggested?

Thanks so muc!
Katrina said…
mmmm Im cravin a cupcake!!!
Anonymous said…
Thank you! Thank you! Thank you!!! This is information I need in just the nick of time considering I am leaving my Full time job ( I have even already given them my notice, very supportive company)in a month or two to venture into the cupcake business on a full time basis.I have been looking into locations and have ponder the idea of taking out a small business loan. This article has enlightened me on the possibility of looking into getting a loan if not that especially getting my business on the web. The other links were awesome!
Anonymous said…
I think this is excellent.

Running a buiness is a lot of HARD WORK, and cost money.

At the end of the day, no matter what you are selling, cupcakes, or ballons, its a business, and your bottom line is to bring in revenue.
Jennywenny said…
Thanks for sharing, its good to get a reminder that if you're going to get into this business you need more than just 20 friends who are going to pop in once every now and then, you'll need to be absolutely fantastic and very popular.

In my pessimistic mind 120 cupakes is about what I expected.
Anonymous said…
It looks like the 120 cupcakes a day is to only break even with monthly expenses, not even start making up for start up expenses.
As a person who is in the process of opening a bakeshop that includes cupcakes on the menu, this article is a good overall assessment of what you are looking at. We've been home-based while working too for 6 years now and we decided to take the plunge last year. It took that long to get where we are now, the paint is on the wall, yes one wall(see point below about starting small). Our dad has been in the restuarant/convenience store/liqour store biz since we were in diapers, so we grew up knowing how it is to work for yourself, rewarding but hard as hell. This is NOT an overnight process, nor is a loan easy to come by. Some things for those low on cash, but really want to do this: Research, Start Small, Expect Unexpected, Get Known by people with $, Have the Personality for Self-Employment, Be Patient.
Anonymous said…
I think if you wanted to open that cupcake bakery in NYC you would need to add another zero at the end of the $50,000.
Peg A said…
Interesting. I think if I were ten years younger and mor energetic I might be more excited about such a prospect. I bake cupcakes for one local cafe, and this spring will start selling baked goods one day a week at the local farmers' market. That is enough for me for now!
I agree with what michelle said, the idea of opening a bakery/cafe is appealing but not the day to day running of a business...again, if I were younger maybe!
Anonymous said…
For the most part I think the breakdown is accurate. We are opening our cupcake shop in Parker, CO in May and our start up costs are probably going to total under $20,000...including equipment. I was determined to get all my equipment used and craiglisted EVERYTHING! In addition, now is the time to shop around for commercial spaces. We were able to find an awesome space downtown and negotiate tenant improvements. When all is said and done we will probably only be spending around $5,000 on contruction/installations of our space.

Also, the $2.25 per cupcake for 120 cupcaks doesn't add up to the $8, only adds up to around $6,500 so that isn't breaking even. We are hoping to do 15 dozen a day at $2.75 per cupcake. We feel this is doable since we will be the only cupcake shop in southwest Denver and we have been in this community as a special order cupcakery for over a year now. Our name is out there and I think that definitely helps.
Thanks for this post! I'm also starting a cupcakery service from my home and there were a lot of details that i still wanted to be clear.
Michelle Lei♥ said…
I am currently in the process of starting my cupcake business...I just chose a name.Need to trademark.
I love coming to your blog.It has inspired me to do what I love best..Bake cupcakes!! I am using your sight to get some useful information..thank you!!
Michelle Lei♥ said…
I am so excited to be starting a cupcake business!! I hate what I am doing right now...I am giving up one business to bake cupcakes BUT i love doing it and I am so inpired by your blog..thaxxx!!!! Will keep you posted on pictures and my new success!!
le petit said…
hi michelle..have you started a business at home or are you opening up a bakery?
le petit said… did you prepare a business plan for your bakery? did you need one??
shataterrah Jones said…
Hello to everyone I read all you guys comments and they are great . My cousin and I are starting a cupcake business from home first and see how it goes and build from there and I wanted to know what i need to do any advice from anyone. I am in business school and she is in high school this sis something we are very passionate about and I wnated to know the rule about starting up a business.
Kendra Smith said…
120 cupcakes a day for a month (30 days) equals 3600 cupcakes needed to be sold a month. If each cupcake is sold for $2.25 and 3600 cupcakes are sold a month then the total income for the cupcakes is $8100.00 which would be breaking even.
Cake City™ said…
Anyone who is interested in opening a bakery in the Tampa FL area should check out this page: that we have set up. My wife and I are retiring and are offering everything plus branding, trademark, domain name, etc. Take a look.
Unknown said…
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